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Our briefing for Thursday April 29, 2021:
Apr 29, 2021 4:25:06 PM
- In the United States, the Big Apple is getting set for a big reopening with New York City Mayor Bill de Blasio targeting a July 1st “full reopening” just ahead of the July 4th long weekend. “We are ready for stores to open, for businesses to open, offices, theaters, full strength,” said de Blasio on Thursday. Wall Street should be back up and running by then too with JP Morgan CEO Jamie Dimon making the news earlier in the week that they will require their employees to return to the office by July. When asked if federal or state leaders could have a say in the reopening (Governor Andrew Cuomo has butted heads with the mayor of NYC in the past), de Blasio said federal and state governments “always have a say”.
- In Canada, Ontario was busy making news again on the COVID-19 front issuing their own, albeit temporary, paid sick leave and promising to expand vaccine eligibility to all adults by the end of May. The Doug Ford led-provincial Conservative government announced on Wednesday they would provide three paid sick days through a temporary program that would end in September. Critics were quick to point out three days would not cut it, but after a year of essential workers pleading for paid sick days, at this point three days is better than zero days. Elsewhere in the country, Conservative Leader Erin O’Toole said during a Thursday news conference the federal government needs to find more vaccines so that every adult in the country can get a COVID-19 vaccine dose by Victoria Day, which is May 24th.
- The United Kingdom government is being urged to adopt the furlough-style benefits system even after the pandemic is over. The Resolution Foundation, an independent British think tank, said the government should introduce a form of earnings insurance, where unemployment support is paid at 80% of previous pay for three months. Adopting the measure would cost £3.25 billion a year if the jobless rate was similar to the level in 2009 after the financial crisis and less than £1 billion if it were near 2019 levels. According to the Institute for Fiscal Studies, the UK welfare system is one of the least generous in the developed world.
- In Germany, officials are hoping a COVID-19 third wave has crested and that a record number of vaccinations should help turn the tide. Germany’s seven-day average of coronavirus cases per 100,000 people fell on Thursday for the third consecutive day to 155 – its lowest in two weeks. The country also vaccinated 1.1 million people on Wednesday – the most of any day so far. The justice ministry has proposed exempting people who have been fully vaccinated or recovered from COVID-19 from stricter limits that the federal government were granted last week through new legislation. According to a Reuters report, the cabinet is expected to discuss those plans next week.
- Philippines President Rodrigo Duterte said on Wednesday that the strict travel and public health restrictions will remain in Metro Manila and surrounding areas until mid-May. The restrictions have been in place since mid-April and have limited travel in-and-out of the capital, along with shutting down many non-essential businesses. President Duterte apologized for the extension of the lockdown, scolded people for violating health protocols, but ultimately said the government is to blame for the current situation the Philippines is in right now.
- In India, the national health ministry says it has more than 12 million COVID-19 vaccines waiting to go, countering media reports of vaccine shortages in multiple cities and districts across the country. On Thursday, the Delhi health minister told local reporters that the national capital didn’t have any vaccines left and had issued a request for more. According to the national health ministry, Delhi had received 3.8 million vaccines to date and had 500,000 doses in storage. Maharashtra state has also issued an appeal for more vaccines after media reported Mumbai – the country’s financial hub – had announced the suspension of COVID-19 vaccinations for three days due to shortages.
Covid-19 – Due Diligence And Asset Management
US Recovery from Pandemic Recession is Showing Momentum
Brief : Powered by consumers and fueled by government aid, the U.S. economy is achieving a remarkably fast recovery from the recession that ripped through the nation last year on the heels of the coronavirus and cost tens of millions of Americans their jobs and businesses. The economy grew last quarter at a vigorous 6.4% annual rate, the government said Thursday, and expectations are that the current quarter will be even better. The number of people seeking unemployment aid — a rough reflection of layoffs — last week reached its lowest point since the pandemic struck. And the National Association of Realtors said Thursday that more Americans signed contracts to buy homes in March, reflecting a strong housing market as summer approaches. Economists say that widespread vaccinations and declining viral cases, the reopening of more businesses, a huge infusion of federal aid and healthy job gains should help sustain steady growth. For 2021 as a whole, they expect the economy to expand around 7%, which would mark the fastest calendar-year growth since 1984.
100 Days of Biden: Investors Weigh Impact on US Economy, Markets and Climate
Brief: As Joe Biden’s presidency passes the 100-day mark, fund managers are considering what impact his inaugural period in office will have on financial markets. A mammoth USD1.9 trillion Covid-19 relief package has already passed through Congress, and further stimulus is expected amid plans to overhaul US infrastructure and update the energy system in line with the administration’s climate goals. It is clear that Biden’s administration is taking a very different direction compared to the Trump government it replaced in January. Biden has called for a series of “once-in-a-generation investments in our nation’s future”, and planned spending so far amounts to USD6 trillion. This includes the American Families Plan, announced to Congress on Wednesday, which sets out major spending and tax cuts for workers, families and children planned for the next 10 years. Investment managers have given their views on the market impact of the increased Covid fiscal stimulus and infrastructure spend, as well as the trends they see arising over the coming years as a result of the new direction of the US. Matt Benkendorf, CIO of Vontobel Quality Growth, believes that markets could see more volatility later in the year, as inflationary spending plans take their course.
PE Firms Make GBP10.1 Billion Carve-Out Deals as Pandemic sees Corporates Shed Business Units
Brief: PE firms made GBP10.1 billion of corporate carve-out acquisitions in the UK last year, up from just GBP765 million in 2019 as the Covid-19 pandemic drove more corporates to sell non-core business units, says Mayer Brown, the global law firm. Mayer Brown says that the economic disruption of the past year has forced many large businesses to focus on their core operations to a much greater extent, leaving them much more open to sales of less strategically-important business units. Private equity funds with significant capital to deploy have been a major beneficiary of corporates’ increased interest in divestments and have frequently been bidders in these auctions. This includes large US PE houses, who were involved in all four of the UK corporate carve-out deals worth more than GBP1 billion concluded by PE buyers in 2020…
T. Rowe Price Plans to Bring Staff Back to Offices in September
Brief: T. Rowe Price Group Inc. Chief Executive Officer Bill Stromberg said the firm plans to bring its U.S. workers back to the office by Sept. 13 after more than a year of remote work. The money manager will allow employees in North America to return on a voluntary basis until that date, with social distancing measures in place, Stromberg said in an interview Thursday after the Baltimore-based company posted first-quarter results. “We’re coming back with a commitment to additional workplace flexibility, more than we’ve had in the past,” Stromberg said. “Some jobs really do function better in the office than others, and some can be more independent than others,” he added. “We’re in the process of working that out, job-by-job, right now.” Financial firms are stepping up efforts to bring workers back as Covid-19 vaccines become more broadly available and in-person schooling resumes. Many companies are deciding whether to bring everyone back full time or embrace more flexible schedules that would allow staff to work remotely for part of each week.
Manulife CEO Embraces Flexible Schedules, Slow Return to Office
Brief: Manulife Financial Corp. Chief Executive Officer Roy Gori isn’t in a hurry to bring the insurer’s employees back to the office, and when he does, they’ll still have plenty of flexibility to work from home. The company hasn’t set a date to bring workers back, and it will continue to allow them to perform some portion of their jobs from home, Gori said. While the office is important for creativity and innovation, Manulife has managed to keep employees engaged and productive while working from home thanks to investments in technology and an emphasis on meeting workers’ needs, Gori said. “We’re not in a huge hurry to get people back,” Gori said in an interview Wednesday. “The current environment of having people work remotely is working incredibly effectively for us.” Financial firms’ plans to return workers to the office have been varied. JPMorgan Chase & Co. became the first major U.S. bank to mandate a return to offices for its whole U.S. workforce, telling staffers in a memo Tuesday that they’ll need to come back in about two months on a “consistent rotational schedule.” Citigroup Inc. plans to bring more workers back in July while Wells Fargo & Co. is seeking a more normal environment in September.
Australia’s Wealth Fund Swells to Record A$179 Billion
Brief: Australia’s sovereign wealth fund grew to reach a record A$179 billion ($140 billion) as it notched up another quarter of solid returns. The Future Fund returned 4.5% in the three months to March 31, and posted the best yearly performance to March since 2017, it said in a statement Thursday. Global equities hit fresh records during the quarter as economies continued to rebound from the pandemic shock of 2020. “All funds have beaten their target returns across all timeframes,” Chairman Peter Costello said in the statement. “Markets have continued their recovery, driven by the deployment of vaccines, quantitative easing and fiscal stimulus around the world.” The Future Fund is keeping almost 19% of its portfolio in cash and maintained its equities holdings flat at about one-third of the fund last quarter. Total equity allocation is about 1.6 percentage points below the same time last year as Costello echoed Norway’s sovereign wealth fund in expecting more market volatility. “With interest rates at historically low levels, markets are very sensitive to any prospect of inflation and rising rates as a consequence,” he said. “The Board recognizes that the investment challenge ahead is significant and is continuing to assess and position the portfolio to generate mandated long-term returns while managing risk.”
